LONDON: The British-based online fashion retailer ASOS is stepping up investment in high-tech warehouses to speed deliveries and cut costs as e-commerce expands at a breakneck pace.
Online sales of clothes and shoes have exploded in recent years to become the most popular e-commerce category in most of Europe, with market research firm Mintel predicting the market will grow 14 percent in 2013 to about ¤38bn ($52bn).
ASOS, the big success story in British retailing in recent years with its fast-changing fashions snapped up by Internet-savvy twenty-somethings, said it would increase investment to about £110m ($90m) over two years as it reported a 23 percent rise in full-year profit. It invested £33m in the 2012-13 year.
ASOS said it would expand its huge distribution centre in northern England and build a new northern European hub to service France, Germany and Scandinavia.
ASOS’ sales to the European Union jumped 51 percent in the year to August 31, while worldwide sales, announced last month, rose 40 percent to £754m. Its Berlin-based peer Zalando yesterday reported sales growth of 72 percent in its first six months, to ¤809m ($1.11bn).
The world’s two biggest fashion retailers, Zara-owner Inditex and Hennes & Mauritz, have been slow to embrace e-commerce, but are now expanding fast, with Zara recently launching in Russia and H&M in the United States.
Like Zalando, ASOS has grabbed market share by offering free deliveries and returns, requiring maximum processing efficiency.
ASOS said its medium-term goal was to cut the labour cost per unit handled in warehouses to 50 pence from 63 pence in 2013 and 71 pence in 2012, while speeding up delivery times. “The ultimate goal is midnight cut-off for next-day delivery to 98 percent of the UK,” said ASOS founder and chief executive Nick Robertson.
Shares in ASOS have rocketed since floating in 2001 and have more than doubled over the past year, giving it a market capitalisation of about £4.5bn.